PPF, NSC rates slashed again; here’s how much return small savings schemes will give now

PPF, NSC rates slashed again; here’s how much return small savings schemes will give now

If you are a risk-averse investor and have been banking on small savings schemes for the purpose of saving and investment as well as building your retirement nest egg, then there is some bad news for you.

It may be noted that the small saving schemes interest rates, which are linked to the benchmark 10-year government bond yields, are now reset every quarter. (Reuters)

If you are a risk-averse investor and have been banking on small savings schemes for the purpose of saving and investment as well as building your retirement nest egg, then there is some bad news for you. For, the government has reduced the return on small savings schemes – including Public Provident Fund (PPF), NSC, Kisan Vikas Patra and Senior Citizen Savings Scheme — by 10 basis points. Following these reductions, the interest rate on PPF is now 7.8 per cent, 5-year Senior Citizen Savings Scheme 8.3 per cent, Kisan Vikas Patra 8.5 per cent and NSC 7.8 per cent.

It may be noted that the small saving schemes interest rates, which are linked to the benchmark 10-year government bond yields, are now reset every quarter. The last revision in rates came in the month of March, when the rates for such schemes had been reduced by 10 basis points. Although these rate cuts are not good for small savers and senior citizens, however financial experts say that the reduction will help banks bring down the lending rates which is good for the industry. Also, this signals the government’s resolve to keep lowering cost of capital in our economy and is certainly a welcome move.

“Interest rates on several small saving instruments were cut by the Government of India on Friday. Although the cut may not be significant in real terms, yet it signals continuation of interest rates softening cycle. Politically any significant softening of interest rates is a difficult proposition as depositors lose money and hence any such announcement is usually accompanied by protests and demand for roll back. These incremental, small cuts, however, are a good strategy of achieving the overall objective of lower interest rates and cushioning the impact on depositors and thereby preventing any political backlash,” says Ashish Kapur, CEO, Invest Shoppe India Ltd.

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According to him, the continuous lowering of interest rates is a big positive for business and economic development. High cost of capital has always been a competitive disadvantage for the Indian industry. “Therefore, this move should be welcomed by business and industry,” he says.

From the stock market and mutual funds point of view also, this is a move in the right direction as lower deposit rates will encourage investors to divert their funds towards mutual funds and shares.

Minimum ranged peoples are always put their future in the Small Savings Schemes .Govt. should take necessary steps for improvement of thesse categorised families in the whole nation .As well as a special interest raise scheme should be launch a high yielding return value scheme for long term basis to face the future need.

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Prahallad Bisoyi

Jul 3, 2017 at 9:30 am

Govt. should reform all the financial systems including Small Savings Schemes on the basis of common mans welfare . Here I wish to suggest a small word to improve the economic standard of the lower income people,If a new scheme may be launched for the poor categorised to mantain the economic balance for run of human dignity life in a Nation.

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Ram Deshpande

Jul 2, 2017 at 8:03 am

Yes the money lending Tate's would be reduced but still citizens will definitely suffer.Govt shall prepare a good scheme for dr citizens retired from private servicers who gets lumpsum amount at the time of retirement and St citizens invest that amount in small saving schemes.On interest they service.Where as govt servers after retirement gets pension which is increasing time to time.Govt wants the people to move for private jobs but after retirement they face difficulties since they won't get sufficient interest on their retirement amount from banks nor from govt saving schemes. Finance department shall think on this.Bring a scheme where private retiree will get sufficient interest to serve his lives.The govt shall protect the St citizens interest by providing good and sufficient interest through banks and small saving schemes. Jai Hind Jai Kisan.Ram Deshpande Narayanguda Hyderabad

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Umamahesh Rao-Dommeti

Jul 2, 2017 at 7:28 am

This policy n action need to be stopped. Its exploiting our poor, middle class and our senior citizens and robbing of their meagre small savings and feeding the rich and industry. It may lead to slow bleeding to death of small investors n senior citizens whose retirement plans and expected returns get jeopardised putting them into more financial problems in their old age. Please respect and let live our elderly population. Please reverse this cutting of interest rates for small savings.

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Umamahesh Rao-Dommeti

Jul 2, 2017 at 7:19 am

This is not at all good for poor, middle class n senior citizens. It is simply robbing the poor of their small savings even one to ten paise and feeding the rich and industry. Like the slow release medicines, this works in reverse slow hemorrhage of the poor economy of the poor senior citizens. All the retirement plans and returns expected will get jeopardised and senior citizens will suffer most due to such bad policies and actions of the government. Please stop this exploitation of our elders.

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M. S. KIRNALLI

Jul 2, 2017 at 6:44 am

I think Govt. Banks are determined to kill senior citizens, middle class people and encourage NPA by big shots.!!

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Prabir

Jul 1, 2017 at 7:47 pm

In the name of growth, interest rates are coming down sharply to provide low rate interest to various industries.
How will those people survive who are dependent on interest earning on their lifetime minimum savings?
The pensioners get some relief with increase in DA. The interest rates on senior citizens' account should be linked with rates of DA time to time. How will the senior citizens cope up with the ever rising market scenario and the huge cost of medical treatment which is imperative with the growing age?

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Mohan lal

Jul 1, 2017 at 5:23 pm

The government should not cut the interest rate on the small savings announced yesterday.All these instruments of saving are used by retired persons.It is as per their name, "Small Saving",it is for the poor retired persons..This government is not think about the senior citizens poor's.